Deforesting Malaysia

Kuala Lumpur, Malaysia --Malaysian
Prime Minister Mahathir Mohamad is threatening that this fast-developing
nation will forego participation in the June 1992 United Nations Conference
on the Environment and Development (UNCED) in Brazil because of what he
sees as "abuse" from First World environmentalists.

The prime minister,
leader of this Southeast Asian nation for more than a decade, says he fears
the UNCED will simply be used by European, U.S. and Australian environmentalists
to pressure "weak" countries of the Third World.

He suggests that Third
World nations could hold their own summit, and says, "If we go there [to
Brazil] to hear them [the First World] abuse us, then it's no use."

Many
environmental non-governmental organizations and Third World governments
have voiced concerns about Northern countries controlling the UNCED. Mahathir's
threat, however, reflects a struggle over the fate of Malaysia's rainforests,
and may have more to do with protecting logging interests than with protecting
Third World countries from Northern imperialism. Rainforests have already
been largely destroyed in the 11 West Malaysian states between Thailand
and Singapore, and those in the two big East Malaysian states of Sarawak
and Sabah, which comprise just over half Malaysia's territory, are now
disappearing fast.

The event that precipitated Mahathir's threat was a
"terrorist" attack last July 5 on several logging cranes and barges in
Sarawak, about 400 miles east of the capital, Kuching. Eight environmentalists
from the United Kingdom, Germany, the United States, Sweden and Australia
chained themselves to the logging cranes and barges in the early morning
to protest the harvesting of timber. After eight-and-a-half hours, police
arrested the "Sarawak 8," all of whom later pleaded guilty to charges of
interfering with business and were sentenced to 60-day jail terms.

The
eight were part of a team of 20 people from the Rainforest Information
Center in Australia and two other militant environmental organizations,
Earth First! and Robin Wood.

The protesters' rationale is that timber concessionaires,
including Weyerhauser of the United States, are devastating the tropical
forests, leading to soil erosion, destruction of wildlife and uprooting
of the native Dayak population, and contributing to global warming.

A visitor
to Kuching, a modern city of nearly 400,000 people at the western edge
of Sarawak, would hardly guess that this struggle is taking place. But
140 miles east, in Sarawak's rainforest heartland, clear-cut areas can
be seen on the hillsides, as well as giant clouds of smoke where the forest
is being burned--either by accident or on purpose. The first sound heard
at sunrise is the relentless buzz of chainsaws gouging into ancient trees.

The annual cut of timber in Sarawak has quintupled since 1973, according
to charts on display at the Timber Museum outside of Kuching. Sahabat Alam
Malaysia (Friends of the Earth, Malaysia) claims, "No where in the world
are the forests being chopped with such ferocity and speed as in Sarawak."
Today, timber represents about 30 percent of Sarawak's exports, bringing
in around $600 million yearly. Only oil--representing about 40 percent
of Sarawak's exports--is more profitable for the region.

Evelyne Hong of
the Institut Masyarakat in West Malaysia estimates that 10,500 square miles
of Sarawak have been logged since the early 1960s. In Sabah, half the size
of Sarawak, 660 square miles of timber were logged annually in the 1980s,
according to Philip Hurst, a British ecologist.

Though there are laws mandating
reforestation and national parks on the books, these laws tend to be ignored.
Hurst notes in his recent book, Rainforest Politics: Ecological Destruction
in Southeast Asia: "It is an open secret that timber concessions are handed
out in East Malaysia as a means of strengthening political allegiances
or as rewards for favors."

Exploitation of Malaysian timber resources,
urged by the World Bank and International Monetary Fund as a means to accumulate
foreign exchange, has contributed to the nation's fast economic growth.
Since 1985, Malaysia's per capita income has risen from $1,500 to $2,400.

Mahathir attacks environmentalists working to protect these resources as
colonists, saying they "still want to dominate us. They are descended from
a colonial and imperial race. Now that they cannot colonize us politically,
they will try to colonize us indirectly."

Mahathir has sent a delegation
to other Islamic nations--Saudi Arabia, the United Arab Emirates, Iran
and Turkey--to rally support against the environmentalists who he says
are trying to "sabotage" Malaysia's timber trade. Those countries also
happen to be very good customers, having purchased $223 million worth of
Malaysian wood last year.

Mahathir believes that the environmentalists
want Sarawak's Penans- -a branch of the native Dayak population--"to remain
'forest people' ... They want the Penans to be a 'museum piece' so that
they can come and look at the last of the cavemen.' The Penans are a discovery
for them to use as an excuse to pressure a small country."

He adds, "We
all know that the environment has been polluted by advanced countries,
not Malaysia."

Not all Malaysians agree with Mahathir's views on the environment
and the UNCED, however. Josie Zaini, president of the Malaysian branch
of the International Organization of Consumers Unions, for example, says
her country should not only take part in the UNCED, but should also play
a leading role, "building alliances with governments and non-governmental
organizations." She says that by getting actively involved in international
environmental efforts, Third World nations may be able to change the First
World's attitude that it "knows best" about environmental matters.

Manjeet
Singh, a lawyer who is president of the Malaysian Bar Council, takes an
even harder line. He says, "all environmental groups in Malaysia are too
timid to speak out" against the prime minister, and adds "the newspapers
are also scared to speak out. We are not a dictatorship, but we're also
not totally open."

Singh says "much more attention should be paid to our
timber destruction, especially in Sarawak."

And, while Mahathir's criticism
of Northern countries may resonate with Malaysians, it appears his tolerance
for rainforest destruction is out of step with the country's citizenry.
A recent poll of Malaysians indicated a widespread belief that "the threat
to the environment is real." Sixty-four percent agreed, 14 percent said
there was "too much fuss" about the environment, while 22 percent said
"don't know." And deforestation was considered one of the three biggest
problems, along with chemical emissions and river pollution. Younger, better-
educated Malaysians were most concerned--and education standards in the
country are rising.

With this high level of domestic concern about the
rainforests, and the international pressure being brought to bear, there
may be enough opposition to logging to preserve parts of Malaysia's rainforests.
If not, Mahathir and the timber companies appear ready to oversee their
complete destruction.

- William Steiff

Oil Squeeze

A handful of large, vertically integrated multinational oil companies have
launched a full-scale campaign to force smaller competitors out of business,
boost their own profits and overcharge consumers, according to small business
owners and consumer groups who testified at a September congressional hearing.
The critics charged that the oil companies are executing a full-fledged
"game plan" to eliminate competition in the refining, distribution and
sale of gasoline.

The oversight hearing of the House Subcommittee on Regulation
and Energy of the Small Business Committee was held "because new evidence
indicated that the large oil companies are siphoning the competitive juices
from the energy sector," according to subcommittee chair Representative
Ron Wyden, D-Oregon.

According to the witnesses who testified at the hearing,
the large oil companies' plan to eliminate competition includes the following
elements:

Price Manipulation. By dropping retail prices at company-owned
gas stations, the big companies are able to undercut competition from independent
retailers.

Anti-competitive Contracting. The large oil companies pressure
retailers to buy from them even when independent distributors offer lower
prices.

Federal Deregulation.
The Reagan and Bush administrations have abandoned anti-trust actions and
have allowed mergers and consolidation within the industry.

"The past decade
has witnessed the systematic destruction of competing refiners and marketers
by Big Oil," asserted Edwin S. Rothschild of the consumer group Citizen
Action at the hearing. "With their increased control over gasoline supplies,"
said Rothschild, "the major oil companies have been able to manipulate
prices to wreck competitors and overcharge consumers." Rothschild includes
Amoco, Arco, Chevron, Conoco, Exxon, Marathon, Mobil, Phillips, Shell,
Sun, Texaco and Unocal in the definition of "Big Oil."

Representatives
of small businesses and independent gasoline retailers testified that the
major oil companies have used a wide range of methods to force them out
of business. Lynn Bearer, executive director of the Northern Ohio Petroleum
Retailers Association, said her organization's membership is declining
because "independent retail dealers [are being] driven from the marketplace
by the unfair and anticompetitive practices of the major oil companies."

Rothschild says the oil companies' tactics--"legal and otherwise"--have
put them in the position "to dictate gasoline and other petroleum product
prices. Such control negates the free market, hurts consumers, and costs
the rest of the economy billions of dollars every year." Consumers pay
between five and ten cents more per gallon of gas in areas where the major
oil companies have successfully gained market control compared with areas
where there is still competition, according to a Citizen Action report
released at the September hearing.

Citizen Action found that the major
oil companies each control particular areas of the country. In Washington,
D.C., for example, four oil companies--Amoco, Exxon, Chevron and Shell--
control over 85 percent of retail gas sales. In California, four companies--Arco,
Chevron, Shell and Unocal--control almost 62 percent of retail gas sales.
Rothschild specifically accused Arco of using "Mafia-like tactics" to become
the number one gasoline retailer on the West Coast.

The hearing was called
in connection with two bills that have been introduced in Congress to encourage
greater competition at the wholesale and retail levels. One bill, introduced
by Wyden, would free dealers to buy gasoline from any outlet offering their
brand. The second bill, introduced by Mike Synar, D-Oklahoma, would prohibit
refiners from charging wholesalers more than they charge retail customers
at company-owned stations, thereby prohibiting refiners from coercing dealers
into joining price-fixing schemes.

Officials of the oil industry disputed
the findings of the Citizen Action report and voiced opposition to the
legislation at the hearing. Stu L. McDonald, testifying on behalf of the
American Petroleum Institute (API), said that U.S. motorists fared better
than gasoline consumers in other industrialized nations during the Persian
Gulf oil crisis. "In sum, consumers are as well-off--and perhaps better
off--today as they have been in 50 or more years," he stated. "When it
comes to gasoline prices, the good old days are now." McDonald said motorists
can now choose between about 200,000 retail outlets operated by thousands
of different businesses.

McDonald cited a study recently released by the
API that contradicts the findings of the Citizen Action report. The API
study determined that most wholesale gasoline markets are not concentrated
and that there is "considerable" entry/exit in the industry, indicating
competition. "Fears of rising concentration and excessive prices/profits
in regional markets, following de- control of gasoline prices in 1981,
were unfounded. Gasoline manufacturing and marketing exhibit competitive
structure and performance, and progress," the report concluded.

But, according
to D.G. Daskal, general counsel for the Service Station Dealers of America,
an association of independent gas retailers, approximately 8,000 independently
operated stations either closed down or changed hands in the last year.
And, as competition is eliminated and market power consolidated, profits
rise. Citizen Action found that the annual refining and marketing profits
of 15 major oil companies during the second half of the 1980s were nearly
double their level during the first half of the decade--$4.5 billion a
year versus $2.4 billion.